Updated Version 1 - Challenges in Boeing aircraft production dragged down third-quarter performance

Full text includes additional details, 14th paragraph adds stock price performance, with chart attached

Dan Catchpole

Reuters, Seattle, October 27 - Boeing BA.N reported a larger-than-expected third-quarter loss on Tuesday, with supply chain challenges and production delays in its commercial aircraft division overshadowing higher profit margins in the company’s other business segments.

After years of crises and controversy (link), the aircraft manufacturer continued its long road to recovery this quarter, following turmoil that damaged its reputation and left it with staggering debt.

This quarter, Boeing secured U.S. regulatory approval for the 737 MAX 7 (link), won the U.S. Navy's sixth-generation F/A-XX fighter contract (link), and generated positive free cash flow for another consecutive quarter; additionally, the larger MAX 10 model was certified in October.

"Market expectations are increasing, and rightly so. We are on a firmer footing than a year ago, but there's still more to do to work through backlogs, strengthen our culture, and improve how we operate day-to-day," CEO Kelly Ortberg said in a memo to staff after the earnings report.

According to data compiled by London Stock Exchange Group (LSEG), the aircraft manufacturer reported an adjusted loss of 34 cents per share for the quarter ending in September, while the market had expected a loss of 21 cents per share.

Revenue for Boeing's commercial aircraft segment dipped slightly to $10.7 billion, with an operating loss of $697 million. The profit margin narrowed to just 6.5%, compared to a 48.3% narrowing in the same period last year.

The company attributed the poor results to lower-margin aircraft deliveries and rising production costs, including those involving the supply chain.

Boeing has struggled to increase the monthly output of the 737 model from 42 to 47 planes, a goal it had hoped to reach this summer (link). CEO Kelly Ortberg stated at an industry conference in September that the company could not manufacture wings fast enough.

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In Boeing's defense segment, increased deliveries, improved operations, and a $252 million subsidiary sale combined to boost net profit for the quarter to nearly $500 million, with an operating margin of 6.2%, up from 1.7% a year before.

Boeing Global Services earned $1 billion, with an operating margin of 18.3%.

This U.S. aircraft manufacturer ended the quarter with net debt of $25.2 billion, down slightly from $25.9 billion three months earlier and $30.4 billion a year prior.

Its stock price rose slightly in premarket trading.

(To facilitate non-native English speakers, Reuters has automatically translated its reports into several other languages. As automated translations may be inaccurate or fail to include required context, Reuters does not guarantee the accuracy of the automated translation. They are provided for readers' convenience only. Reuters assumes no responsibility for any damage or loss caused by the use of the automated translation function.)